The Ninth Circuit’s Take on Background Check Disclosures

The legal landscape surrounding background checks seems to be constantly changing. With the multitude of Fair Credit Reporting Act (FCRA) lawsuits filed recently, courts have had the opportunity to interpret many provisions of the FCRA.

Continuing this trend, the Ninth Circuit Court of Appeals dove into FCRA interpretation with Gilberg v. California Check Cashing Stores, LLC. The court looked at what may be one of the most debated and confusing obligations of the FCRA: the disclosure requirements for employers that use a background screening company to get background information on employees and applicants. You may remember that before obtaining background information from a background screening company on an applicant or employee, an employer must:

Provide the applicant/employee with a clear and conspicuous written disclosure, in a document consisting solely of the disclosure, that the employer may obtain a Consumer Report on the applicant/employee for employment purposes; and
Get the applicant/employee’s written consent to receive such report

In this case, after analyzing an employer’s disclosure document, the Ninth Circuit determined that it was NOT: (1) clear; and (2) in a document that consisted solely of the disclosure. To read the court’s decision, click here.

Some potential takeaways from the court’s analysis:

    • A document that consists solely of the disclosure means precisely that – there can be no surplus language whatsoever in the document. Even language that informs an employee or applicant of their rights under state law is too much. If the document has any content beyond the FCRA mandated disclosure language, it may not comply with the FCRA.
    • To determine whether the disclosure was “clear,” the court stated that clear means “reasonably understandable.” In this case, using terms like “all-encompassing,” having poor grammar and punctuation, and including state law information in the disclosure created a document that is not “reasonably understandable” (and not clear).
    • Having capitalized, bold, and underlined headings, easy-to-read labels, and all information on the front page, was enough for the Ninth Circuit to say the disclosure was clear.
  • The court’s decision may give employers some food for thought on what can, and more importantly, what can’t be in their disclosure forms. Mainly, it may not be unreasonable to think that other courts could adopt the Ninth Circuit’s standards for FCRA compliance. Of course, it’s always a good idea to discuss your disclosures with trusted legal counsel to make sure that your documents fit in with current court interpretations of all applicable laws.

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